Australian property returns to all-time high in March
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After price declines towards the end of 2024, which now looks like a mere hiccup, Australian home values have once again risen to a new peak.
The upward momentum from February's interest rate cut carried through to March, bringing gains to every capital city and state regional market bar one.
Is this the beginning of another strong run of growth in 2025? Find out what's up ahead.
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Australian property prices: March 2025
According to the latest CoreLogic data, the national median home price rose another +0.4 per cent in March.
That boost has pushed the Australian median price up above $820,000, the highest it's ever been.
| Market | Month | Quarter | Annual | Median value |
|---|---|---|---|---|
| Sydney | 0.3% | 0.4% | 0.9% | $1,190,616 |
| Melbourne | 0.5% | 0.3% | -2.6% | $781,318 |
| Brisbane | 0.4% | 0.9% | 8.6% | $899,824 |
| Adelaide | 0.8% | 1.0% | 11.0% | $827,675 |
| Perth | 0.2% | 0.2% | 11.9% | $806,205 |
| Hobart | -0.4% | 0.2% | -0.2% | $657,059 |
| Darwin | 1.0% | 2.8% | 2.6% | $519,287 |
| Canberra | 0.2% | -0.1% | -0.5% | $854,398 |
| Combined capitals | 0.4% | 0.5% | 2.8% | $900,629 |
| Combined regional | 0.5% | 1.4% | 5.3% | $666,830 |
| Australia | 0.4% | 0.7% | 3.4% | $820,331 |
Following a sudden recovery in February, Sydney and Melbourne both capitalised in March with growth of +0.3 per cent and +0.5 per cent respectively.
Brisbane and Adelaide also had stronger months, while Perth continued to ease slightly but remained in positive territory.
Darwin values shot up a full +1.0 per cent and Canberra stayed close to flat, making Hobart the only capital city to record a decline over March.
Looking regionally, solid gains were seen in every state, with South Australia delivering a standout result of +1.4 per cent.
"Improved sentiment following the February rate cut is likely the biggest driver of the turnaround in values, along with the cut’s direct influence of a slight improvement in borrowing capacity and mortgage serviceability," said CoreLogic's Tim Lawless.
"With the rate-cutting cycle expected to be drawn out, it will be interesting to see if this positive inflection in values can last in the face of affordability constraints."
Three key takeaways from the current market
The 2025 market is already seeing some noteworthy shifts as price growth returns. Here are a few of the headline trends worth following.
Price growth is balancing out between the top and bottom ends of the market
Since mid-2023, a clear trend emerged around the overperformance of more affordable homes.
The combination of record-high property prices and high interest rates had been pushing more and more buyer activity towards what could be considered entry-level homes, while the more expensive end of the market dragged.
Now, after a rate cut has eased some of that pressure for buyers, some balance is returning across different price points.
CoreLogic are now expecting the upper end of the market in Sydney and Melbourne to show some short-term overperformance, while the disparity in other cities is expected to shrink.
Consumer sentiment is improving fast
A sharp run of interest rate hikes followed by more than a year on hold put pressure on Australians everywhere, resulting in sinking consumer sentiment.
But, again as a result of February's rate cut, The Westpac and Melbourne Institute consumse sentiment index reached a three-year high in March
As CoreLogic put it, "When consumers feel more confident about the domestic economy and their household finances, they are more prepared to make high-commitment decisions such as buying or selling a home."
As a result, they expect market activity to increase and, with another rate cut being forecast for as soon as May, sentiment may continue to improve throughout the year.
Rents are still at peak levels, driving buyer demand
Australian renters have had a tough few years, enduring incredible rates of asking rent growth and a widespread shortage of properties for lease in the face of strong population growth.
"Despite the slowdown in rental growth, the annual pace of change remains slightly above the pre-COVID decade average of 2.0 per cent," said Mr Lawless.
“Nationally, rents have risen 38.4 per cent over the past five years, more than double the 15.4% rise seen in wages over the five years to December 2024.”
While the pace of rental growth has slowed significantly, it remains an uncomfortably competitive market that a growing base of tenants is looking to escape.
It's expected, then, that as borrowing capacities increase, demand could be bolstered by a cohort of renters-turned-buyers over 2025.
What's next for Australian property?
There are some short-term question marks coming up in the next couple of months that could have an impact on our property markets.
The first is the upcoming federal election, which will be held on May 3rd. It's common for activity to slow a bit in the weeks before an election as buyers and sellers (particularly investors) take a wait-and-see approach.
There are also rising expectations that we could see another rate cut at the RBA's next meeting in May after the central bank delivered some more confident wording about inflation this month.
With life resuming post-election and the potential for interest rates to fall further, it could prove to be an unusually busy end to autumn in property.
CoreLogic's report noted that "a gradual easing in monetary policy, cost of living relief, income growth, tight labour markets and improved sentiment are all likely to support housing sector activity."
They did, however, caution that the rate-cutting cycle is expected to be slow, housing affordability remains a widespread issue, and population growth is easing, all of which may offset the above tailwinds to some degree.
On the whole, they say that "it's looking more convincing that the positive turn is more than a temporary recovery," but it's unlikely we'll see another genuine housing boom any time soon.
